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Niva Bupa is one of the fastest-growing key health insurance companies in the country. Niva Bupa Health Insurance IPO looks to raise Rs 2,200 crores. The issue is a combination of fresh issue aggregating to Rs 800 crores and offer for sale aggregating to Rs 1,400 crores.

About Niva Bupa Health Insurance IPO:

• The health insurance company, set up in 2008, is a joint venture between the Bupa Group and Fettle Tone LLP .
• It provides customer access to a comprehensive health ecosystem and service capabilities through its Niva Bupa Health mobile application and website.
• Niva Bupa Health Insurance Company is one of the leading standalone retail health insurers (SAHI) in India, with a Gross Direct Written Premium (GDPI) of ₹5,499.43 crore in fiscal 2024.
• Niva Bupa is considered one of the fastest-growing key health insurance companies in the country.
• Currently, it caters to over 50 million customers. Its business is spread across key countries like UK, Australia, Spain, Chile, Poland, New Zealand, Hong Kong SAR, Turkiye, Brazil, Mexico, India, US, Middle East, and Ireland .
• Company’s distribution channels comprise (a) direct sales through the employees, as well as online sales through the website and ‘Niva Bupa’ mobile application and (b) intermediated sales through the distributors. They have a diversified channel mix with corporate agents (banks and others), individual agents and broker channels contributing 27.25%, 32.07% and 27.04% respectively of their business by GDPI for Fiscal 2024 respectively.
• Niva Bupa Health Insurance Company Limited is a joint venture between the Bupa Group and Fettle Tone LLP that provides insurance in the health sector.

Financials :Niva Bupa Health Insurance IPO

Anchor: Niva Bupa Health Insurance IPO

Niva Bupa Health Insurance Company has raised around ₹990 crore from anchor investors ahead of its initial public offering (Out of the total allocation, 27.78% were allocated to 6 domestic mutual funds. The anchor book saw participation from foreign and domestic institutions, including marquee investors such as Amansha Holdings, Zulia Investments, A91 Emerging Fund II LLP, Nippon Life, Tata Balance Advantage Fund, Axis Mutual Fund, Morgan Stanley Investment Fund.

Salient Points:Niva Bupa Health Insurance IPO

• India’s health insurance sector has witnessed rapid growth since FY18. The health insurance GDPI (Gross direct written premium) has more than doubled from Rs 0.37 tn in FY18 to Rs 1.08 tn in FY24, growing at a CAGR of 19.5%.
• India exhibits significantly lower insurance penetration when compared to developed global economies.
• True North had first picked up a stake of nearly 56% in Niva Bupa in February 2019. In 2023, it offloaded a 21% stake to its British joint venture partner Bupa plc for Rs 2,711 crore, giving the latter a controlling stake in the insurer.  
• Under the OFS, Fettle Tone LLP will sell shares to the tune of ₹1,050 crore, and Bupa Singapore Holdings Pte Ltd will offload shares valued at ₹350 crore. At present, Bupa Singapore Holdings Pte owns a 62.19 per cent stake, while Fettle Tone LLP holds a 26.8 per cent stake in the insurance firm.
• The company intends to utilise the net proceeds from the fresh issue towards boosting its capital base to strengthen solvency levels, and a portion of the funds will be used for general corporate purposes.
• Gross written premium (GWP) of Rs. 5,600 cr – split 70:30 between individual and group. Channel mix comprises 32% from 1.5 lakh individual agents, 27% from 486 brokers, 20% banks, 13% direct. Combined ratio of 98.8% in FY24
• Loss of Rs. 197 cr in FY22 can be attributed to Covid claims . As premium increased 38% YoY in FY24, net profit rose to Rs. 82 cr.
• In Q1FY25, premium rose 31% YoY, but seasonality and accounting methodology led to Rs. 19 cr net loss. However, this is likely to get recouped by year-end, as Q1FY24 bottomline was negative at Rs. 72 cr. Q4 topline is the strongest for insurance business due to year-end purchases.
• The company has a considerable market share; as of 2024, it stood at 16.24% in the standalone health insurance space. Niva Bupa has maintained a customer-centric orientation; as of March 2024, it covered 14.73 million active lives insured and had a claims settlement ratio of 91.93%. It has 10,460 hospitals across the network with cashless facilities in place. Special tie-ups have been made with a few hospitals for extra customer convenience
• Peers:

• Niva Bupa Health Insurance is the second largest in terms of retail health insurance GWP of 3839.7 Crores FY24.
• In Q1FY25, premium rose 31% YoY, but seasonality and accounting methodology led to Rs. 19 cr net loss. However, this is likely to get recouped by year-end, as Q1FY24 bottomline was negative at Rs. 72 cr. Q4 topline is the strongest for insurance business due to year-end purchases, undertaken by policyholder for tax sops
• Company has transitioned from a loss of Rs.196.5 Crores in FY22 to a net profit of Rs.81.85 Crores in FY24. 
• The insurance firm’s Gross Written Premium (GWP) increased by 37.68 per cent to ₹5,607.57 crore in fiscal 2024 from ₹4,073.03 crore in fiscal 2023. Further, profit surged to ₹81.85 crore in fiscal 2024 from ₹12.54 crore in fiscal 2023.
• the combined ratio of the company has seen a predominant improvement compared to FY22 which represented 107.41% has been reduced to 98.76% in FY24 indicating its operational efficiency and increased underwriting profit. A combined ratio of above 100% represents the company is paying more for its claims and expenses than its earnings.
•  expense ratio of the company which has significantly decreased over the past three years where it stood at 45.29% in the year 2022 and has been reduced to 39.74% in the year 2024 depicting better cost management and improved claims management.
• company’s solvency ratio, which increased from 1.72 in FY22 to 2.55 in FY24 representing its long-term obligations, especially the claims made by policyholders.
• Singapore state investment firm Temasek and Indian mid-market private equity firm A91 Partners have doubled down on their earlier bets on Niva Bupa Health Insurance Co Ltd. 
• In end Oct 2024, one of the promoters sold 1.16% stake at Rs. 85 per share for Rs. 150 cr. IPO price is 13% lower, reelecting some meltdown in markets.
• I am likely to stay away from Niva Bupa Health Insurance IPO. May put in a small amount if there is good QIB response to IPO. Retail health insurance is considered a promising segment in the health insurance industry due to its higher average premium per life, higher renewal rates, and lower combined ratios. However there is need to exercises some caution, due to premium valuation amid low profit margins even as growth prospects are good. Since its IPO in 2021, share price of Star Health has almost halved, despite good profitability in last 3 years. With exception of ICICI Lombard, non-life insurance firms have not rewarded shareholders ,thus indicating a tendency to charge high premium value for future growth. .
• GMP as reported on social media is quite low or NIL.
• This post is exploratory and educational purposes only.
• Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.